LOAN NUMBER 8982-JO
Loan Agreement
(Second Equitable Growth and Job Creation Development Policy Loan)
between
THE HASHEMITE KINGDOM OF JORDAN
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
LOAN NUMBER 8982-JO
LOAN AGREEMENT
AGREEMENT dated as of the Signature Date between THE HASHEMITE
KINGDOM OF JORDAN (“Borrower”) and the INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT (“Bank”) for the purpose of providing
financing in support of the Program (as defined in the Appendix to this Agreement).
WHEREAS: (A) following an international effort to provide development support
to countries most affected by refugees in the Middle East region; and having satisfied itself
as to the feasibility and priority of the Program aimed to support the Borrower’s set
foundations to: (i) reduce business costs and improve market accessibility and encourage
new investment; (ii) create more flexible and integrated labor markets and provide better
and more efficient social assistance; and (iii) improve fiscal sustainability and take more
informed public sector decisions regarding energy sector, sustainability and efficiency, and
risk, the Borrower has requested the Bank to extend a loan to assist in the financing of the
Program;
(B) The Bank has decided to provide this financing on the basis of, inter alia:(i)
the actions which the Borrower has already taken under the Program and which are
described in Section I.A of Schedule 1 to this Agreement; and (ii) the Borrower’s
maintenance of an adequate macroeconomic policy framework.
NOW THEREFORE, the Borrower and the Bank hereby agree as follows:
ARTICLE I — GENERAL CONDITIONS; DEFINITIONS
1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to
and form part of this Agreement.
1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement
have the meanings ascribed to them in the General Conditions or in the Appendix
to this Agreement.
- 2 -
ARTICLE II — LOAN
2.01. The Bank agrees to lend to the Borrower a Loan in the amount of one billion four
hundred fifty million Dollars ($1,450,000,000), as such amount may be converted
from time to time through a Currency Conversion (“Loan”).
2.02. The Front-end Fee is one quarter of one percent (0.25%) of the Loan.
2.03 The Commitment Charge is one quarter of one percent (0.25%) per annum on the
Unwithdrawn Loan Balance.
2.04. The interest rate is the Reference Rate plus the Fixed Spread or such rate as may
apply following a Conversion; subject to Section 3.02(e) of the General
Conditions.
2.05. The Payment Dates are May 15 and November 15 in each year.
2.06. The principal amount of the Loan shall be repaid in accordance with Schedule 2 to
this Agreement.
2.07. Without limitation upon the provisions of Section 5.05 of the General Conditions,
the Borrower shall promptly furnish to the Bank such information relating to the
provisions of this Article II as the Bank may, from time to time, reasonably request.
ARTICLE III — PROGRAM
3.01. The Borrower declares its commitment to the Program and its implementation. To
this end, and further to Section 5.05 of the General Conditions:
(a) the Borrower and the Bank shall from time to time, at the request of either
party, exchange views on the Borrower’s macroeconomic policy
framework and the progress achieved in carrying out the Program;
(b) prior to such exchange of views, the Borrower shall furnish to the Bank
for its review and comment a report on the progress achieved in carrying
out the Program, in such detail as the Bank shall reasonably request; and
(c) without limitation upon paragraphs (a) and (b) of this Section, the
Borrower shall promptly inform the Bank of any situation that would have
the effect of materially reversing the objectives of the Program or any
action taken under the Program including any action specified in Section
I of Schedule 1 to this Agreement.
- 3 -
ARTICLE IV — REMEDIES OF THE BANK
4.01. The Additional Event of Suspension consists of the following, namely that a
situation has arisen which shall make it improbable that the Program, or a
significant part of it, will be carried out.
4.02. The Additional Event of Acceleration consists of the following, namely that the
event specified in Section 4.01 of this Agreement occurs and is continuing for a
period of 60 days after notice of the event has been given by the Bank to the
Borrower.
ARTICLE V — EFFECTIVENESS; TERMINATION
5.01. The Additional Condition of Effectiveness consists of the following, namely that
the Bank is satisfied with the progress achieved by the Borrower in carrying out
the Program and with the adequacy of the Borrower’s macroeconomic policy
framework.
5.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date.
ARTICLE VI — REPRESENTATIVE; ADDRESSES
6.01. The Borrower’s Representative is its minister responsible for planning and
international cooperation.
6.02. For purposes of Section 10.01 of the General Conditions:
(a) the Borrower’s address is:
Ministry of Planning and International Cooperation
Post office Box 555
Amman, 11118
The Hashemite Kingdom of Jordan; and
- 4 -
(b) the Borrower’s Electronic Address is:
Facsimile: E-mail:
+962-6-464 9341 [email protected]
6.03. For purposes of Section 10.01 of the General Conditions:
(a) the Bank’s address is:
International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America; and
(b) the Bank’s Electronic Address is:
Telex: Facsimile: E-mail:
248423(MCI) or 1-202-477-6391 [email protected]
64145(MCI)
- 5 -
AGREED as of the Signature Date.
THE HASHEMITE KINGDOM OF JORDAN
By:
_____________________________________
Authorized Representative
Name: __________________________
Title: __________________________
Date: __________________________
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By:
_____________________________________
Authorized Representative
Name: __________________________
Title: __________________________
Date: __________________________
Country Director
Saroj Kumar Jha
04-Jun-2019
Minister of Planning and International Cooperation, Minister of State for Economic Affairs
Mohamad Al-Ississ
05-Jun-2019
- 6 -
SCHEDULE 1
Program Actions; Availability of Loan Proceeds
Section I. Actions under the Program
A. Actions Taken Under the Program. The actions taken by the Borrower under the
Program include the following:
Pillar 1: Reducing business costs and improving market accessibility
1. With the view to (a) open sectors important in Jordan’s key value chains, the COM
has amended, through Investment Bylaw No. 80, published in the Official Gazette
No. 5573 on May 16, 2019, Non-Jordanian Investments Bylaw No. 77-2016 to: (i)
fully liberalize (100 percent foreign ownership allowed) 22 of 51 activities and
services; and (ii) provide that foreign ownership in any activity or sector not on the
negative list (as published in the Non-Jordanian Investment Bylaw) is permitted
without restriction; and (b) modernize and simplify the licensing requirements for
businesses, the COM has submitted to the Parliament a law abolishing Crafts and
Industries Law (1953).
2. The COM has enacted a consolidated legal framework for public procurement
(applicable also to SOEs) through the issuance of a new Bylaw No. 28, as
published in the Official Gazette on May 1, 2019 (containing provisions for
framework agreements, e-Government procurement, independent review of bidder
complaints, and establishment of an oversight and policy unit) consistent with
international good practices.
3. The COM has adopted a decision No. 11/3/1/127 dated January 1, 2019,
authorizing the Ministry of Information and Communications Technology to enter
into agreements with private sector to lease excess capacity of the national
broadband network, based on a PPP model.
Pillar 2: Creating more flexible and integrated labor markets and providing better and
more efficient social assistance
4. The MoL has through its decisions (a) No. 2/2018 dated December 30, 2018,
amended the 2010 Decision for Article 69 of the Labor Code by removing all
restrictions on the types of jobs and hours women are allowed to work; and (b) No.
3/2018 dated December 30, 2018, issued instructions allowing high- skilled
foreigners to work in occupations and sectors previously restricted to them.
5. The COM has approved through Decision No. 56/10/6/1440 dated
January 16, 2019, the digitization of payments to new NAF beneficiaries through
e-wallet and bank accounts.
- 7 -
Pillar 3: Improving fiscal sustainability and taking more informed decisions regarding
risk
6. The Borrower raised domestic revenues in the 2019 Budget Law through (a)
implementation of income tax reform; (b) revisions to the general sales tax and its
administration; and (c) increases in customs revenues and nontax revenue.
7. The COM approved the Climate Change Bylaw No. 79, published in the Official
Gazette No. 5573 on May 16, 2019, to continue low-carbon transition and climate
resilient growth of the economy.
B. Actions to be Taken Under the Program. The actions taken by the Borrower
under the Program include the following:
Pillar 1: Reducing business costs and improving market accessibility
8. The COM approved an investor grievance mechanism that enables the Jordan
Investment Commission to identify, track, manage and solve grievances arising
between investors and public agencies within specified time periods.
Pillar 2: Creating more flexible and integrated labor markets and providing better
and more efficient social assistance
9. The COM approved a targeting mechanism for delivering electricity support
benefits that will help in providing social protection to the poor.
Pillar 3: Improving fiscal sustainability and taking more informed decisions
regarding risk
10. The COM has approved the “Roadmap for Financial Sustainability of the
Electricity Sector,” and EMRC has conducted Quarterly Tariff Reviews at the end
of Quarter-2 and Quarter-3 of 2019 consistent with the financial model adopted by
the EMRC.
11. The COM has adopted the “Electricity Bill Recovery Mechanism” to achieve
reduction in distribution companies’ receivables from electricity bills of the public
sector.
12. The COM has approved the NEPCO’s debt optimization implementation plan.
13. MEMR submitted to the COM the results of a review of the power purchase
agreements and other related agreements for the significant power generation
projects.
- 8 -
14. The COM has submitted revised PPP Law to the Parliament (a) reflecting
modifications provided by Cabinet Decision No. 56/10/6/17135 dated April 18,
2019; and (b) reinforcing provisions on government controls of fiscal risks and
contingent liabilities as contained in PPP Law No. 31 (2014).
Section II. Availability of Loan Proceeds
A. General. The Borrower may withdraw the proceeds of the Loan in accordance
with the provisions of this Section and such additional instructions as the Bank
may specify by notice to the Borrower.
B. Allocation of Loan Amounts. The Loan (except for amounts required to pay the
Front-end Fee) is allocated in two withdrawal tranches, from which the Borrower
may make withdrawals of the Loan proceeds. The allocation of the amounts of the
Loan to this end is set out in the table below:
Allocations
Amount of the Loan
Allocated
(expressed in US$)
(1)(a) First Withdrawal Tranche-A 600,000,000
(1)(b) First Withdrawal Tranche-B 125,000,000
(2)(a) Second Withdrawal Tranche-A 596,375,000
(2)(b) Second Withdrawal Tranche- B 125,000,000
(3) Front-end Fee 3,625,000
TOTAL AMOUNT 1,450,000,000
C. Withdrawal Tranche Release Conditions
1. No withdrawal shall be made of the First Withdrawal Tranche-A and First
Withdrawal Tranche-B unless the Bank is satisfied with: (a) the Program being
carried out by the Borrower; and (b) the adequacy of the Borrower’s
macroeconomic policy framework.
2. No withdrawal shall be made of the Second Withdrawal Tranche-A and Second
Withdrawal Tranche -B unless the Bank is satisfied, after an exchange of views as
described in paragraphs (a) and (b) of Section 3.01 of Article III of this Agreement
based on evidence satisfactory to the Bank:
- 9 -
(a) with the progress achieved by the Borrower in carrying out the
Program;
(b) that the macroeconomic policy framework of the Borrower is
adequate; and
(c) that the actions described in Part B of Section I of this Schedule
have been taken.
If, after this exchange of views, the Bank is not so satisfied, it may give notice to
the Borrower to that effect and, if within ninety (90) days after the notice, the
Borrower has not taken steps satisfactory to the Bank, with respect to paragraphs
(a), (b) and (c) above, then the Bank may, by notice to the Borrower, cancel all or
any part of the Unwithdrawn Loan Balance.
D. KSA Guarantee
The Borrower acknowledges and confirms that the Loan is guaranteed by a KSA
Guarantee Agreement, pursuant to which the KSA Guarantor will guarantee
certain obligations of the Borrower under this Agreement, subject to the terms and
conditions set forth therein. The Borrower understands and agrees that, in the event
of any payment to the Bank by the KSA Guarantor under the KSA Guarantee
Agreement as a result of any non-payment by the Borrower under this Agreement,
the KSA Guarantor may have certain rights of subrogation and the Bank may
assign to the KSA Guarantor any right to receive repayment from the Borrower
under this Agreement, all subject to the terms and conditions of the KSA Guarantee
Agreement.
E. UK Guarantee
The Borrower acknowledges and confirms that the Loan is guaranteed by a UK
Guarantee Agreement, pursuant to which the UK Guarantor will guarantee certain
obligations of the Borrower under this Agreement, subject to the terms and
conditions set forth therein. The Borrower understands and agrees that, in the event
of any payment to the Bank by the UK Guarantor under the UK Guarantee
Agreement as a result of any non-payment by the Borrower under this Agreement,
the UK Guarantor may have certain rights of subrogation and the Bank may assign
to the UK Guarantor any right to receive repayment from the Borrower under this
Agreement, all subject to the terms and conditions of the UK Guarantee
Agreement.
F. Deposit of Loan Amounts
The Borrower, within thirty (30) days after the withdrawal of the Loan from the
Loan Account, shall report to the Bank: (a) the exact sum received into the account
- 10 -
referred to in Section 2.03(a) of the General Conditions; (b) the details of the
account to which the Jordanian Dinar equivalent of the Loan proceeds will be
credited; (c) the record that an equivalent amount has been accounted for in the
Borrower’s budget management systems; and (d) the statement of receipts and
disbursement of the account referred to in Section 2.03(a) of the General
Conditions.
G. Closing Date. The Closing Date is December 31, 2021.
- 11 -
SCHEDULE 2
Disbursement-Linked Amortization Repayment Schedule – Level Repayment
1. Subject to the provisions of Section 3.03 of the General Conditions, the Borrower
shall repay each Disbursed Amount in semiannual installments payable on each May 15
and November 15, the first installment to be payable on the ninth (9th) Payment Date
following the Maturity Fixing Date for the Disbursed Amount and the last installment to
be payable on the sixty eight (68th) Payment Date following the Maturity Fixing Date for
the Disbursed Amount. Each installment except for the last one shall be equal to one point
sixty-seven (1.67) of the Disbursed Amount. The last installment shall be equal to the
remaining outstanding amount of the Disbursed Amount.
2. If any one or more installments of principal of the Disbursed Amount would,
pursuant to the provisions of paragraph 1 of this Schedule, be payable after May 15, 2054,
the Borrower shall also pay on such date the aggregate amount of all such installments.
3. The Bank shall notify the Loan Parties of the amortization schedule for each
Disbursed Amount promptly after the Maturity Fixing Date for the Disbursed Amount.
- 12 -
APPENDIX
Section I. Definitions
1. “Council of Ministers” or the “COM” means the Borrower’s Council of Ministers.
2. “Crafts and Industries Law” means the Borrower’s Act of Crafts and Industries
No. (16) for the year 1953.
3. “EMRC” means the Borrower’s Energy and Mineral Resources Regulatory
Commission established pursuant to Law No. 17 of the year 2014, published in the
Official Gazette on April 30, 2014.
4. “First Withdrawal Tranche” means the amount of the Loan allocated to the
category entitled “First Withdrawal Tranche” in the table set forth in Part B of
Section II of Schedule 1 to this Agreement.
5. “General Conditions” means the “International Bank for Reconstruction and
Development General Conditions for IBRD Financing, Development Policy
Financing”, dated December 14, 2018.
6. “Jordan Investment Commission” means Borrower’s Investment Commission,
established by Law 30 (2014) to promote investment into Jordan.
7. “KSA Guarantee Agreement” means the guarantee agreement executed between
the Bank and the KSA Guarantor in a principal amount of two hundred million
dollars (US$200,000,000), in respect of a portion of the Loan, together with
interest thereon, as such guarantee agreement may be amended from time to time,
and such term includes all appendices, schedules and agreements supplemental to
the KSA Guarantee Agreement.
8. “KSA Guarantor” means the Kingdom of Saudi Arabia.
9. “MEMR” means the Borrower’s Ministry of Energy and Mineral Resources.
10. “MoF” means the Borrower’s Ministry of Finance.
11. “MoL” means the Borrower’s Ministry of Labor.
12. “MoPIC” means the Borrower’s Ministry of Planning and International
Cooperation.
13. “NAF” means the Borrower’s National Aid Fund, established pursuant to Law
No. (36) for the year 1986, published in the Official Gazette on January 10, 1986.
- 13 -
14. “NEPCO” means Borrower’s National Electricity Power Company, established by
virtue of Law No. 10 (2010), or its legal successor.
15. “On-Bill Payment Assistance” means a payment assistance program wherein a
fixed credit amount is reflected in the electricity bills of eligible households.
16. “PPP Law” means Public Private Sector Partnership Law No. 31 (2014).
17. “Program” means the program of objectives, policies, and actions set forth or
referred to in the letter dated May 16, 2019, from the Borrower to the Bank
declaring the Borrower’s commitment to the execution of the Program, and
requesting assistance from the Bank in support of the Program during its execution
and comprising actions taken, including those set forth in Section I of Schedule 1
to this Agreement, and actions to be taken consistent with the program’s
objectives.
18. “Second Withdrawal Tranche” means the amount of the Loan allocated to the
category entitled “Second Withdrawal Tranche” in the table set forth in Part B of
Section II of Schedule 1 to this Agreement.
19. “Signature Date” means the later of the two dates on which the Borrower and the
Bank signed this Agreement and such definition applies to all references to “the
date of the Loan Agreement” in the General Conditions.
20. “UK Guarantee Agreement” means the guarantee agreement executed between the
Bank and the UK Guarantor in a principal amount of two hundred fifty million
dollars (US$250,000,000), in respect of a portion of the Loan, together with
interest thereon, as such guarantee agreement may be amended from time to time,
and such term includes all appendices, schedules and agreements supplemental to
the UK Guarantee Agreement.
21. “UK Guarantor” means the Government of the United Kingdom of Great Britain
and Northern Ireland, acting through the Department for International
Development.